By Vivienne Russell | 26 March 2013
Housing professionals have warned that government-backed homebuyer loans could stoke a house price bubble.
A centrepiece announcement of the Budget, the ‘Help to Buy’ scheme offers £130bn in mortgage guarantees to help people to get on the property ladder or move into a bigger home if struggling to raise a deposit. A further £3.5bn in shared equity loans will be available for those buying new-build properties.
The scheme will run for three years from 2014. Chancellor George Osborne called it ‘a great deal for homebuyers’ and ‘a real support for home builders’.
Grainia Long, chief executive of the Chartered Institute of Housing, said:
‘“Help to Buy” acknowledges the role housing can play in powering recovery.’
But she warned: ‘The government will need to monitor the impact of these policies carefully to ensure they are increasing new housing building rather than simply stoking house prices.’ She said the Budget’s failure to remove the limit on local authorities’ borrowing caps on building was ‘disappointing’.
National Housing Federation chief executive David Orr agreed there remained a danger of undersupply. He said: ‘If we don’t build enough homes, we’ll just create another housing bubble that will keep pushing house prices up.
